Intel recently announced the total revenue of its foundry business for the first time in history. Traditionally, Intel designed and manufactured its own chips, reporting final chip sales to investors. In contrast, companies like Nvidia and AMD design their own chips and then ship them overseas to foundries, often Taiwan's TSMC, for production.

Under CEO Patrick Gelsinger, Intel unveiled a plan to investors in which the company would continue to make its own processors while also starting an external foundry to make chips for other companies. Intel's prominent position as one of the few American companies manufacturing cutting-edge semiconductors on American soil played a significant role in securing nearly $20 billion in funding from the CHIPS and Science Act last month.

Currently, a large percentage of Intel Foundry's revenue comes from internal operations. To provide a clearer financial picture, Intel restructured its products division to account for the foundry as an expense, much like a “factory” company would. This restructuring resulted in the division reporting $11.3 billion in operating income on $47.7 billion in sales in 2023.

Intel said it expects its foundry's losses to peak in 2024 and eventually be even lower between the current quarter and the end of 2030. Gelsinger noted that Microsoft will use Intel's foundry services and that the company already has $15 billion on the books income from the foundry.

Gelsinger expressed optimism about future earnings growth for Intel from its foundry business, noting that 2024 will be the lowest operating loss point for the foundry. The lack of profitability in the foundry business is attributed to past decisions, including the slow adoption of EUV technology, which Gelsinger cited as a factor.

By Samantha Johnson

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